Germany: Game Changer For Cryptocurrency In Germany? Court Holds No License Required To Trade Bitcoins

In Short

The Court Decision: On September 25, 2018, the Higher Regional Court of Berlin held that bitcoins would not qualify as financial instruments for the purposes of the German Banking Act (Kreditwesengesetz, "KWG"), thus dismissing the licensing requirement for bitcoin-related investment activities in Germany.

The German Regulator's View: The decision is in contrast to the position of the German regulator, the Federal Supervisory Authority (Bundesanstalt für Finanzdienstleistungsaufsicht, "BaFin")—that bitcoins qualify as financial instruments in the form of "units of account" (Rechnungseinheiten) and therefore related investment services or activities require a license under the KWG.

Looking Ahead: The qualification of bitcoins as financial instruments brings activities involving bitcoins within the scope of financial regulation, so the decision could be a door opener for virtual currencies to escape regulation in Germany. However, the BaFin has indicated that it considers the court decision to apply only to the facts of the case and does not change its position and administrative practice regarding the licensing requirement.

The defendant was prosecuted for operating a bitcoin trading platform without having obtained a license for providing investment services, which would be a criminal offense under the KWG if bitcoins were to qualify as financial instruments. After the defendant was convicted in the court of first instance and acquitted by the Regional Court of Berlin, the prosecutor lodged an appeal to the Higher Regional Court of Berlin.

Discussion of the Ruling

The Higher Regional Court held that the defendant's activity did not constitute a regulated activity under the KWG because bitcoins do not qualify as units of account. According to the court, a unit of account needs to be comparable to a "currency," and bitcoins are not comparable to a currency. That is because there is no one issuer of bitcoins, they are not accepted as a means of payment, and they lack a stable value that makes them ineligible as a means of comparing the value of goods or services against a common measure, as is the case with legal currencies. Therefore, bitcoins do not qualify as units of account and, as a consequence, do not qualify as a financial instrument under the KWG.

Interestingly, the court and the BaFin are aligned on their conclusion that bitcoins are not comparable to a currency. However, their respective interpretations of the term "unit of account" are very different. In contrast to the BaFin, the court construed the term more narrowly and concluded that a unit of account would need to be "comparable to a currency." That is based on a historic interpretation of the term and a comparison of the meaning given to such term in other German statutes. The court also points out that the term "units of account" was introduced into the KWG long before virtual currencies came to market, and the legislative materials provide no indication that the term was intended to encompass virtual currencies.

It should be noted that "units of account" as a subcategory of the definition of "financial instruments" is a special feature of the KWG and is not a subcategory of the European definition of "financial instruments" under the Markets in Financial Instruments Directive ("MiFID II"). The decision has therefore less relevance in defining "financial instruments" as the term is used in MiFID and corresponding European legislation, such as the Prospectus Directive, which rely on term's definition in MiFID for their scope of application. Consequently, the immediate effects of this decision are limited to Germany, although it remains to be seen how this decision may influence other European countries and the European Union in their consideration of whether to regulate aspects of the virtual currency market.

Putting the Decision in Perspective

This decision should be considered relative to positions in the area of digital assets recently taken by other EU market authorities. France, for instance, has just enacted a new proposal whereby tokens would be defined as any intangible asset representing, in electronic form, any right that may be issued, held, or transferred through a distributed ledger technology that directly or indirectly identifies its owner. In Spain, the Securities Commission has stated in an official communication to professionals that tokens may constitute a financial instrument depending on the factual analysis of their structure, rights, and obligations on a case-by-case basis, and the Financial Conduct Authority has confirmed it will take the same approach under UK rules.

Four Key Takeaways

  1. The German regulator, since 2013, has taken the view that bitcoins qualify as "units of account" and, therefore, as financial instruments. The qualification of bitcoins as financial instruments meant that certain trading activities in respect of bitcoins required a license under the German Banking Act (KWG).
  2. The Higher Regional Court of Berlin held that contrary to the BaFin, bitcoins do not qualify as "units of account," and therefore the related trading activity in the case at question did not require a license under the KWG.
  3. In response to the decision, the BaFin has announced that it considers the decision to be constrained to the facts of the case and will not change its position. Market participants should therefore continue to be cautious when engaging in activities relating to bitcoins and other virtual currencies in Germany or offering financial services in respect of virtual currencies to customers in Germany.
  4. This position does not apply in other EU jurisdictions. Therefore, any cross-border activity should involve a legal analysis to ensure compliance with local laws and regulations.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions